Saturday, April 14, 2007

A Voice for the WTO's Have-Nots

Supachai Panitchpakdi, who stepped down as Thailand's Deputy Prime Minister and Commerce Minister in mid-February, will take over as director general of the World Trade Organization in September, 2002. Supachai, trained as an economist, is one of Southeast Asia's most high-profile voices pushing for continued economic reform.

Nevertheless, he isn't a doctrinaire free marketeer. He's determined to see that the developing world's concerns about globalization are heard in the comfortable rooms where trade deals are hammered out, to the evident discomfort of the U.S. and other countries that opposed his campaign to head the WTO. The split in the ranks ultimately led to New Zealand's Mike Moore and Supachai agreeing to share the term equally. Supachai recently spoke with BusinessWeek Asia Regional Editor Mark L. Clifford. Here are edited excerpts of their discussion:

Q: What's your vision for WTO?
I'm from a developing country. But my mission is to be a bridge between the advanced countries and the less-advanced countries, to make both sides understand each other's problems. We need each other to coexist. The developing countries feel that they have been a bit short-changed. My plea would be for the advanced countries to pay more attention -- not just lip service -- to the plight of the less-developed countries.

If the new round [of trade talks, which is expected to kick off in Qatar this November] is really to be a development round, we need to show the developing world that there's going to be substance, that [the talks] will guarantee concrete benefits for the less-developed countries. The agenda for the developed countries has been quite well established, like dealing with agriculture, with textiles, and with antidumping procedures.

Q: What do developing countries want?
The first thing is tariff- and quota-free market access for the 48 least-developed countries. Second, the treatment of implementation issues [i.e. changing the current system, which allows stiff penalties even for countries that do not have the institutional ability to implement WTO requirements]. Third, the principle of special and differential treatment. Developing countries need a handicap, just as if they were playing golf. This was agreed years ago but not [implemented].

Fourth, amend antidumping procedures. It seems that developing countries are being investigated [too] much for dumping. Fifth, no linkage between trade and social issues. Developing countries can hardly accept [such a linkage]. Sixth, an earlier liberalization of MFA [the Multifiber Agreement that restricts textile and garment trade], maybe in 2003 rather than 2005.

Q: What are the prospects for China's entry into the WTO?
China should join the WTO before a new round starts. We have agreed at least informally from our meetings among trade ministers at Davos that WTO ministers should be presenting the text for Qatar by July. By that time, China should be a full member [in order] to look at the Qatar text. It's going to be a big problem [if China is not admitted early enough]. We should have China in before April.

Q: Will China's entry result in a wave of Chinese exports?
At the moment, most members of the WTO already have given China MFN [most-favored nation] treatment, so WTO entry doesn't means goods will flood in. We are [already] seeing a lot of cheap [Chinese] farm products in Thailand. Chinese apples are cheaper than our own mangos. At the same time, [this trade] opens up avenues to export fruit from northern Thailand into China

Q: How will China's entry change the region?
In terms of economic power in Asia, there will be a more balanced economic equation between Japan, China, and hopefully India. China has shown strong aspirations toward gaining [more] economic significance in Asia, especially during the ongoing financial crisis. The Chinese have done one thing that [was] very significant to kill the contagion in the area -- their promise not to devalue the renminbi. That helped very much and established China as a major economic power.

China may have to start thinking about having more flexibility in its exchange rate. If they [move to their currency to full convertibility,] it will make Shanghai the next financial center in Asia. Economic power will be tilting toward China.

Generally, more-advanced countries will reap the benefit because of their potential [exports to] China for products like home appliances, steel, farm products, and processed food. Less-advanced countries or countries that have to depend primarily on labor-intensive industries, [such as] new ASEAN members [Laos, Vietnam, Burma, and Cambodia] will have to move rapidly. They will be competing head-on with Chinese products in the U.S. and Europe.

The most fearful effect [will be if] investment [is] diverted into China, especially from advanced countries like Malaysia and Singapore. They will feel the effect.

Q: How can the WTO accommodate critics who claim that it's too secretive and too powerful?
We need to have some forums for meeting from time to time with the accredited representatives of the nongovernmental organizations. They should not participate in negotiations, but there should be a place for them to voice their opinions. We [also] need to declassify our documents earlier.

Q: Is globalization inevitable, or is it in trouble?
I think the process of globalization is inevitable. I think you can stall it. I don't think you can reverse it. It's more useful to look into the positive and negative [sides of globalization].

One of the [reasons for the] backlash against globalization is the loss of sovereignty among countries. That's something we need to understand. There's a need for governments to be more prepared and less interventionist in the market. They need to have a good economic framework. They have to play the role of referee in banking systems and in economies.

[Many ordinary people] are lost. They don't know where to put the blame on a runaway world. Things are happening so fast on the Internet. Their jobs got changed so easily. Things are becoming so uncertain. There will be losers. The best way [to ensure that the benefits of globalization are broadly shared] is to be as open as possible in terms of the transparency of institutions.

Edited by Thane Peterson